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Insights

15 April 2019

The end of Section 21 Notices?

On 15 April 2019, the Communities Secretary, Rt Hon James Brokenshire MP announced that the Government intends to abolish the Section 21 ‘no fault’ eviction process.  This is the procedure where a private landlord serves a notice under Section 21 of the Housing Act 1988 giving at least 2 months’ notice to terminate an Assured Shorthold Tenancy (“AST”) in England.  In addition, the Government has made further proposals in relation to ASTs within its response to its 2018 consultation entitled “Overcoming the Barriers to Longer Tenancies in the Private Rented Sector”.
 
What are the proposals?
The Government is concerned that under the current rules a landlord can serve a Section 21 Notice giving at least 2 months’ notice to terminate an AST without needing to give a reason for terminating the tenancy.  It therefore proposes to repeal Section 21 of the Housing Act 1988 so that a landlord can no longer serve a Section 21 Notice to terminate an AST and will only be able to obtain possession upon establishing a statutory ground for possession.

In addition, the Government proposes amending Section 8 of the Housing Act 1988, which is the procedure available to a landlord to terminate an AST upon establishing a statutory ground and includes grounds based upon the tenant’s default such as non-payment of rent.  Some of the grounds are mandatory and, if established, the Court must make an order for possession, but for other grounds the Court has a discretion whether to make a possession order.  The proposal is for there to be two additional grounds under Section 8 so that a landlord can obtain possession if they wish to sell their property or move into it themselves.  Technically speaking, the latter ground already exists but is only available if the landlord can show they previously lived at the property or they need to occupy the property immediately as their main home.  Under the new proposals, the landlord would need to give 2 months or 8 weeks’ notice in writing and the Government is considering limiting the use of the new grounds until the tenancy has lasted for 2 years.

The Government has scrapped its idea of introducing a 3-year tenancy model with a one off break clause which may be exercised by the landlord at 6 months and instead favours flexible and open ended tenancies.

Why?
The Government identified that 19% of households in England are in the private rented sector and received responses to its consultation which raised concerns that short term tenancies do not offer sufficient security to renters.
 
Through its consultation, the Government found that tenants want flexibility on the length of an AST with some wanting a tenancy in excess of 3 years with others preferring a shorter tenancy.
 
The Government’s intention is to strike a balance between giving greater security to tenants whilst ensuring landlords are able to recover possession of their property if it is needed.  It remains to be seen whether its proposal to abolish Section 21, which has been in existence for over 20 years, achieves that aim given that a landlord’s ability to obtain possession of an AST will be severely restricted.
 
The proposals are part of the Government’s wider reforms in relation to ASTs and the announcement has been made a few weeks before The Tenant Fees Act 2019 comes into force on 1 June 2019 in relation to new ASTs. 
 
Action points?
The law relating to Section 21 Notices remains unchanged at present.

However, the Government will shortly launch a consultation on its proposals to abolish Section 21 of the Housing Act 1988 as a means for a landlord to obtain possession of an AST.  We will let you know once that consultation is published to enable you to respond to it if you wish.

Please do not hesitate to contact a member of the property litigation team for specific advice on ASTs. This briefing note is not a substitute for legal advice on the specific circumstances of the case.
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